Replies to post #790894 on Fannie Mae-No Politics (FNMA)

[Guido2]

He’s just a government stooge.

Thanks for rectifying all his misinformation.

[Donotunderstand]

?
Better or worse

right now - it is - I THINK -? All profit is kept in cash by F and F - (so called capital growth) - and the same (unlimited ?) amount is sent to Treasury BUT ONLY in the form of IOU. Nothing kept by F and F is not matched with an IOU?

At some point - full cap - the dividend is the lower of 10% or profit - per year (maybe measured each quarter) . And would that be in cash to Treasury or the same IOU approach? And would that mean that any profit >10% of value of LP -- is 100% kept by F and F with no IOU ?

[kthomp19]

It's not their "entire net worth" - they still keep the capital buffers and all that.

That's a pretty enormous difference. The ability to capitalize is what the companies got in exchange for the LP ratchet.

If it walks like a duck, sounds like a duck, and poops all over the shareholders sidewalks like a duck....break out the brooms, it's a sweep!

But it doesn't spray poop on the companies' sidewalks at the same time the way the original NWS did. That's the fundamental difference between the original NWS and the LP ratchet: the former was horrible for both the companies and shareholders, while the latter is neutral to the companies (what need do they have for capital beyond the regulatory requirements?) while still being horrible for shareholders.

That's why I don't think any derivative suit regarding the LP ratchet has any chance of success.